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2. Dealing with Us

Deed-in-Lieu

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What is a Deed-in-Lieu?

A deed-in-lieu (" deed in lieu of foreclosure") is a debtor's voluntary conveyance of clear and valuable title of the residential or commercial property to Freddie Mac in exchange for a discharge of financial obligation.

Getting going

If a debtor's difficulty is long-term and they're not able to be approved for any retention options or a brief sale choice, the Servicer needs to review the debtor for a deed in lieu of foreclosure, a quicker and easier procedure that enables struggling property owners to exit gracefully from their homes.

The standard deed-in-lieu streamlines and improves the deal by:

- Avoiding foreclosure.

- Providing to $7,500 in relocation help for homeowners who satisfy certain requirements.

- Accelerating the decision-making procedure by delegating approval of authority to Servicers.

Borrower Eligibility

All customers are qualified for a deed-in-lieu under the following conditions:

- A customer who does not satisfy the requirements for a structured deed in lieu of foreclosure must be experiencing or have experienced among the qualified challenges noted in Single-Family Seller/Servicer Guide (Guide) Section 9202.2( a).

- The borrower should be able to convey clear and valuable title to the mortgaged premises to Freddie Mac.

- The debtor isn't overdue, hasn't obtained a new mortgage in the six months preceding the borrower's delinquency or, if the borrower is current in the 6 months preceding assessment for a deed-in-lieu, the debtor is just allowed to have gotten a new mortgage if their qualified challenge was distant employment transfer.

- if the Borrower is present, in the six months preceding the examination of the Borrower for a deed-in-lieu of foreclosure.

- The Borrower is only permitted to have obtained a new Mortgage if the Borrower's eligible difficulty was distant work transfer.

Exceptions: There are some situations where the Servicer need to send a deed-in-lieu recommendation to Freddie Mac:

- If the residential or commercial property is condemned and/or broker cost opinion (BPO) reveals that the residential or commercial property has actually been inadequately kept, has structural/foundation problems or requirements major repair work.

- If a borrower doesn't fulfill eligibility requirements for a deed in lieu of foreclosure but the Servicer feels it might be the best option for addressing the delinquency. The Servicer should also send a total Borrower Response Package (BRP).

However, unless informed by Freddie Mac, all Servicers are handed over to approve a deed in lieu of foreclosure that satisfies the eligibility requirements of Section 9209.2( a)

Borrower Documentation

Borrower documents is based upon delinquency. Borrowers who are more than 18 months overdue should be assessed for a structured deed-in-lieu.

To find out more about deeds-in-lieu, refer to Chapter 9209.

All Resources

Guide and policy

Guided Answer: Deed-in-Lieu.
Guide Section 9201.2: Freddie Mac loss mitigation assessment hierarchy.
Guide Section 9101.4: Foreclosure suspension responsibilities and extra short sale and deed-in-lieu of foreclosure requirements once the First Complete Borrower Response Package is gotten.
Guide Section 9208.8: Closing, reporting, preparing and remittance requirements for short sales and make-whole preforeclosure sales

Factsheets and lists

Home Affordable Foreclosure Alternatives (HAFA).

Foreclosure Sale Bidding Instructions

Helping you understand basic deed-in-lieu

Guided Answer: Deed-in-Lieu

Related resources and help

Freddie Mac Standard Short Sale FAQ.

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